Oil markets open slightly lower as market weighs mixed supply signals

Brent futures were down 38 cents, at $108.38 a barrel, and US West Texas Intermediate futures were off 58 cents

Oil futures were down slightly Thursday morning, after rising sharply in the first half of the week, as traders weighed a larger-than-expected build in US oil stocks against tightening global supply.

Brent futures were down 38 cents, or 0.35 per cent, at $108.38 a barrel, and US West Texas Intermediate futures were off 58 cents, or 0.56 per cent, to $106.5 a barrel at 6.16 am.

Both contracts on Wednesday had shrugged off a large build in US crude inventories to end the trading session roughly 4 per cent higher. The jump in prices came as worries of more disruptions to global supply continued to rattle the market.

Also Read — Oil traders to cut Russian oil purchases from May 15

The International Energy Agency on Wednesday warned that from May onwards roughly 3 million barrels per day of Russian oil could be shut-in due to sanctions or voluntary embargoes. At the same time, major global trading houses are also planning to curtail crude and fuel purchases from Russia's state-controlled oil companies in May, Reuters reported on Wednesday.

Despite signals that global supply disruption will persist, oil stocks in the US rose by more than 9 million barrels last week, the US Energy Information Administration said on Wednesday, driven in part by releases from the nation's strategic reserves. Analysts in a Reuters poll had anticipated just an 863,000-barrel build.

US gasoline stocks fell 3.6 million barrels last week, far above anticipated levels, and distillate inventories also declined.

"Oil prices are looking very comfortable above the $100 level as US and Chinese demand seems to be heading in the right direction," wrote Edward Moya, a senior analyst with OANDA.

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